Planned stadium funding $9.1m

The cost of Forsyth Barr Stadium for Dunedin's ratepayers
will rise to more than $9.1 million a year if extra spending
signalled by city councillors this week is confirmed.

Despite that, Dunedin Venues Management Ltd chief executive
Darren Burden said yesterday there was no guarantee more
money would not be needed in future - although he hoped that
would not be the case.

Mr Burden told the Otago Daily Times extra support
signalled by councillors this week would allow DVML to turn
losses into small profits, while the events fund helped
attract more big acts to the city.

However, he could not rule out a further call for council
cash, saying there were ''always going to be risks'', as well
as opportunities, associated with budget forecasts.

''This gives us the best opportunity to ensure we don't come
back to council, but there isn't a cast-iron guarantee.''

His comments came after a breakdown of funding arrangements
for the stadium was presented to councillors during the
2013-14 pre-draft annual plan meeting, which concluded on
Monday.

The breakdown showed the stadium already cost the council -
and therefore the city's ratepayers - $7 million a year in
reduced dividends, extra debt repayments and the cost of a
service level agreement with DVML.

That included $5.25 million of annual dividends from the
council's group of companies, normally used to offset rates,
which had been diverted to Dunedin Venues Ltd - which owned
the stadium - to pay stadium debt costs.

Councillors last year also decided to spend an extra $1
million a year to accelerate the repayment of DVL's stadium
debt, reducing the loans from 40 years to 23.5 years and
saving $94 million in interest costs.

In addition, councillors gave DVML an extra $750,000 a year
last year for a new service agreement that promoted greater
community use of the stadium.

That brought the bill for ratepayers to $7 million a year by
last week, when the council's 2013-14 budget meeting began.

Then, on Monday, councillors indicated a desire to spend
another $1.725 million a year accelerating stadium debt
repayments across DVL ($1 million a year) and DVML ($725,000
a year).

That increased the total cost of the stadium for ratepayers
again, to $8.725 million a year, while also freeing up DVML
cashflows and saving another $25 million in interest.

And, if the proposed $400,000 events fund was included, drawn
from existing council budgets to begin with, the total cost
of the stadium for ratepayers was $9.125 million a year.

Extra spending signalled this week was yet to be confirmed,
but would be part of the council's 2013-14 draft budget to be
released for public consultation in March.

Mayor Dave Cull said yesterday it was important to note extra
spending to accelerate debt repayment meant greater savings
in the longer term, by reducing interest costs.

''The ratepayers are going to have to pay this debt sometime,
and the longer we take the more interest we pay.

''I see this as an investment in savings.''

Any decision to increase the repayment of DVL stadium debt by
another $1 million a year, signalled on Monday, would also
come in part from within operational savings identified by
council staff.

Mr Burden said the financial boost would see DVML's budgets
move from the red into the black, with forecasts of a $98,000
loss for 2013-14, followed by small profits of $9000 and
$88,000 in the following two years.

The extra spending on stadium debt and the events fund -
expected to generate more revenue for DVML - had already been
included in DVML's draft budgets.

Asked how confident he was of the new numbers, Mr Burden said
a ''pretty thorough'' review by Dunedin City Holdings Ltd had
concluded DVML's revenues were at optimum levels and expenses
tightly controlled.

DVML operating costs had been cut by 5.8% for 2013-14, while
staff costs were down 10% since 2011, the review found.

However, the company still had to pay rent worth $4 million a
year to DVL to cover its share of stadium debt costs, which
came from revenue and had, to date, turned DVML's operating
profits into end-of-year losses.

Mr Burden, in a report to councillors on Monday, said it was
''reasonable'' to expect operating profit of $3.5 million a
year, before rent to DVL.

However, without the changes signalled, DVML would continue
to post annual losses of $300,000 to $350,000 a year, he
said.

Mr Burden would not say if progress on the events fund would
help secure deals for two more major concerts already ''on
the table'', but talks were continuing.

The company's latest six-month result, covering the first
half of 2012-13, would also be released at the end of
February.

It would show another operating profit - before rent - for
the period, and forecast a full-year result that would
''certainly be an improvement'' on 2011-12, when the company
lost $3.2 million, he said.

The bill

Already in place:

• $5.25 million a year - reduced dividend from Dunedin City
Holdings Ltd to Dunedin City Council (goes to Dunedin Venues
Ltd instead to pay debt costs)

• $1 million a year - DCC to DVL to accelerate stadium debt
repayments (agreed 2012); reduces loan repayment period from
40 to 23.5 years; saves $94 million in interest.

• $750,000 a year - DCC to Dunedin Venues Management Ltd, in
return for service level agreement providing more community
use.

Yesterday (subject to consultation):

• $1 million a year from DCC to DVL to further accelerate
stadium debt repayments, from 23.5 years to 18.5 years; saves
$25 million in interest.